June 19, 2013

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TARGET AND ESTIMATE CHANGES NuVasive, Inc. (NUVA: NASDAQ | US$22.34 | US$1,018.3 M) Setting our sites on 2015: a clear path to margin expansion; reiterate BUY, raising price target to $29 COMPANY UPDATES Infrastructure TransAlta Corporation (TA: TSX | C$13.62 | C$3,569.8 M) Geothermal contract offers increased cash flow stability; maintaining BUY rating and C$18.00 target Life Sciences OraSure Technologies (OSUR: NASDAQ | US$4.15 | US$229.9 M) Several growth opportunities yet to unfold

US Economic Indicators Time Cons. MBA Mortgage Applications – 14-Jun 07:00 -FOMC Rate Decision – 19-Jun 14:00 0.25% Fed Releases Summary of Economic Projections 14:00 Canadian Economic Indicators Wholesale Sales MoM - Apr Equity Indices Ch. S&P/TSX +78.56(+0.64%) Dow Jones +138.38(+0.91%) NASDAQ +30.05(+0.87%) S&P 500 +12.77(+0.78%) Commodities Gold (US$/oz) Copper (US$/lb) WTI Oil (US$/bbl) Recently Published Raging River Exploration; Initiating Coverage With a BUY Rating and C$5.50 Target Price Whitecap Resources; Initiating Coverage With a BUY Rating and C$13.00 Target Price Steve Toth 15-June-2013 Cub Energy Inc.: Black Sea Strategy; Initiating Coverage With a BUY Rating and C$0.70 Target. Christopher Brown 10-June-2013 Argent Energy Trust: A Silver Star to Shine; Initiating Coverage With a BUY Rating and C$13.00 Target Price. Benny Wong 05-June-2013 Parallel Energy Trust: Valuation Looks Tempting But We Are Cautious; Initiating Coverage With a HOLD Rating and C$4.00 Target Price. Benny Wong 05 June-2013 Eagle Energy Trust: The Comeback Kid; Initiating Coverage With a BUY Rating and C$8.50 Target Price. Benny Wong 5-June-2013 Mosaic Capital Corp.: Building Value Through Acquired Growth; Initiating Coverage With a BUY Rating and C$9.75 Target Price. Chris Bowes 04-June-2013 Ch. $0.00 +$0.01 +$0.50 08:30 0.50% Level 12,367.46 15,318.23 3,482.18 1,651.81 Level $1,366.60 $3.16 $98.94

Canaccord Genuity is the global capital markets group of Canaccord Financial Inc. (CF : TSX | CF. : LSE) The recommendations and opinions expressed in this research report accurately reflect the Investment Analyst’s personal, independent and objective views about any and all the Designated Investments and Relevant Issuers discussed herein. For important information, please

see the Important Disclosures section in the appendix of this document or visit Canaccord Genuity’s Online Disclosure Database.

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Annual EPS Annual Revenue 2013E $655.1M (No change) 2014E $702.8M (No change) Target $29.00 from $24.50

Today’s Changes

2013E $1.01 (No change) 2014E $1.00 from $1.01

NuVasive, Inc.
NUVA : NASDAQ : US$22.34

BUY  Target: US$29.00 

William J. Plovanic, CFA 1.847.864.1137 wplovanic@canaccordgenuity.com Kyle Rose 1.847.864.1139 krose@canaccordgenuity.com

COMPANY STATISTICS:
52-week Range: Market Cap (M): Avg. Daily Vol. (000s): Shares Out diluted: US$12.35 - 25.99 US$1,018.3 351.9 45.3 2012A 1.73 7.7x 21.5x Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 151.7 154.4 148.4 165.8 620.3 0.20 0.27 0.23 0.34 1.04 2013E 1.638 8.4x 22.2x 159.5A 160.7 156.4 178.5 655.1 0.26A 0.26 0.24 0.25 1.01 2014E 1.526 7.8x 22.5x 702.8 1.00

Life Sciences -- Biomedical Devices and Services

EARNINGS SUMMARY:
FYE Dec EV/Revenue: EV/EBITDA: P/E: Revenue (M):

SETTING OUR SITES ON 2015; A CLEAR PATH TO MARGIN EXPANSION; REIT BUY, PT TO $29
Investment recommendation
We reiterate our BUY rating and are positioning NuVasive as our top new money pick. We believe the margin expansion story is tangible and expect investors to focus on 2015 margins and earnings given a significant portion of the IP royalty payments to Medtronic cease at that point. Furthermore, we believe the recent acquisition of a manufacturer and the initiation of product introduction in Japan offer additional margin expansion opportunities. All in, we believe operating margins could expand by ~480 basis points over the next two years.

Total EPS:

Total

SHARE PRICE PERFORMANCE:

Investment highlights
 Expiration of patents in 2015 leads to cessation of ~$14.5M in annualized royalty payments to Medtronic in February 2015. This equates to a 160 bp improvement in GMs in 2015. The acquisition of manufacturing highlights a push to in-house manufacturing. The expected benefit is ~110 bp through 2015. International leverage on the back of successful commercialization in Japan combined with general operating expense leverage is expected to contribute ~310 bp of OM improvement through 2015.


Source: Interactive Data Corporation

COMPANY DESCRIPTION:
NuVasive is a pure-play differentiated spine company focused on the design, development and marketing of products for the surgical treatment of spine disorders. The company has gained significant mindshare in the spine community with its minimally invasive XLIF (extreme lateral interbody fusion) technique and proprietary nerve avoidance system. The company markets its products through a direct sales force.
All amounts in US$ unless otherwise noted.

Valuation
We are raising our price target to $29.00 from $24.50. Our valuation is based on our 2015 non-GAAP EPS estimate of $1.40 applied to the group mean 2014E P/E multiple of 20.7x.

Canaccord Genuity is the global capital markets group of Canaccord Financial Inc. (CF : TSX | CF. : LSE) The recommendations and opinions expressed in this research report accurately reflect the Investment Analyst’s personal, inde pendent and objective views about any and all the Designated Investments and Relevant Issuers discussed herein. For important information,

please see the Important Disclosures section in the appendix of this document or visit Canaccord Genuity’s Online Disclosure Database.

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TransAlta Corporation
TA : TSX : C$13.62 TAC : NYSE

BUY  Target: C$18.00 

Juan Plessis, MBA, CFA 1.604.643.0181 jplessis@canaccordgenuity.com Zayem Lakhani, CFA 1.604.643.7506 zlakhani@canaccordgenuity.com

COMPANY STATISTICS:
52-week Range: Avg. Daily Vol. (000s): Market Cap (M): Shares Out (M): Current Dividend: Current Dividend Yield %: C$13.4 - 17.8 786.9 C$3,569.8 262.1 C$1.16 8.5 2012A C$0.50 27.2 C$2.12 6.4 2013E C$0.80 17.0 C$2.80 4.9 2014E C$0.85 16.0 C$3.00 4.5

Infrastructure -- Power

GEOTHERMAL CONTRACT OFFERS INCREASED CASH FLOW STABILITY
Investment recommendation
TransAlta has entered into a power purchase contract for 86 MW of capacity from its Imperial Valley geothermal facilities in California with the City of Riverside. The facilities are operated under a 50/50 joint venture with MidAmerican Energy, and currently power from eight of the 10 facilities is sold under a long-term contract to Southern California Edison. The PPA has a term of 24 years beginning in 2016 and represents about 25% of the total capacity of the Imperial Valley facilities. Although still a couple of years away from coming into effect, the new contract is a positive development as it provides the JV with enhanced and more stable pricing for power from the contracted geothermal facilities which otherwise receive a variable power price based on a function of natural gas prices (the SRAC price). In addition, the new contract sets a precedent on which additional contracting for other geothermal units can be based as contracts roll off. We view this announcement as positive to the stability of longer term cash flow. We are making no changes to our BUY rating and C$18.00 target price.

EARNINGS SUMMARY:
FYE Dec EPS: P/E (x): CFPS: P/CF (x):

SHARE PRICE PERFORMANCE:

Valuation
Source: Interactive Data Corporation

COMPANY DESCRIPTION:
TransAlta is focused on generating electricity in Canada, the US and Australia through its portfolio of plants fuelled by coal, gas, hydro, wind and geothermal resources. The company owns and operates 8,245 MW of net electricity generation. The company also derives revenue from the wholesale trading of electricity and other energy related commodities and derivatives.
All amounts in C$ unless otherwise noted.

Our 12-month target price is primarily based on a discounted cash flow analysis, dividend discount model, and earnings and cash flow multiples relative to both historical valuations and power and pipeline peers. Note that our valuation assumes that the current level of the dividend is maintained. While we have an C$18.00 target price, we see the value of the stock in excess of that level on a discounted cash flow analysis; however, until the company wins back investor confidence and convinces the market that the dividend level is safe, the stock is unlikely to reach its intrinsic value. Should the shares continue to languish at current low levels, we believe there is an increased potential that TransAlta becomes an acquisition target.

Canaccord Genuity is the global capital markets group of Canaccord Financial Inc. (CF : TSX | CF. : LSE) The recommendations and opinions expressed in this research report accurately reflect the Investment Analyst’s personal, independent and objective views about any and all the Designated Investments and Relevant Issuers discussed herein. For important information,

please see the Important Disclosures section in the appendix of this document or visit Canaccord Genuity’s Online Disclosure Database.

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OraSure Technologies
OSUR : NASDAQ : US$4.15

BUY  Target: US$10.00 

Jeffrey Frelick 617.371.3711 jfrelick@canaccordgenuity.com Mark Massaro 617.371.3769 mmassaro@canaccordgenuity.com

COMPANY STATISTICS:
Market Cap (M): 52-week Range: US$229.9 4.06 - 14.01 2012A 87.8 2.6 (0.29) NM Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 20.9 22.6 22.1 22.1 87.8 (0.07) (0.07) (0.04) (0.11) (0.29) 2013E 95.2 2.4 (0.55) NM 21.2A 23.5 24.5 26.0 95.2 (0.18)A (0.16) (0.12) (0.09) (0.55) 2014E 111.1 2.1 (0.34) NM 25.0 27.4 28.3 30.4 111.1 (0.11) (0.09) (0.07) (0.06) (0.34)

Life Sciences -- Biomedical Devices and Services

EARNINGS SUMMARY:
FYE Dec Revenue (M): P/Sales (x): EPS: P/E (x): Revenue (M):

SEVERAL GROWTH OPPORTUNITIES YET TO UNFOLD
Investment recommendation We recently traveled with OraSure management and came away encouraged by the renewed investor interest and the appreciation for the marketing strategy for HIV-OTC. Investment highlights  Driving consumer awareness. OSUR’s marketing strategy and promotional campaign have been aimed at making the consumer aware of HIV home testing. While the details of OSUR’s awareness tracker study are premature, at a high level it appears to show improvement in the first six months. Behavior change. While awareness for home HIV testing is improving, OSUR also needs to change consumer behavior, where awareness leads to testing. On-line purchases seem to be attracting better visitors as there appears to be an increase in conversions to test orders. HCV drivers. While we believe HCV presents the greatest long-term opportunity, positive events we see influencing test sales include increases in public health funding, new HCV drugs, and positive recommendation in USPSTF guidelines.

Total EPS:

Total

SHARE PRICE PERFORMANCE:


Source: Interactive Data Corporation

COMPANY DESCRIPTION:
OraSure develops, manufactures, and markets HIV, HCV and drugs of abuse rapid test kits, primarily for the pointof-care setting to deliver immediate test results. Its business principally involves oral fluid technology (in addition to blood) as an alternative specimen collection. OraSure also has a legacy med-device business for the removal of warts and other benign skin lesions by cryosurgery, or freezing.
All amounts in US$ unless otherwise noted.

Valuation Our $10 price target uses a 4.5x P/S multiple on our 2016 sales estimate of $158M.

Canaccord Genuity is the global capital markets group of Canaccord Financial Inc. (CF : TSX | CF. : LSE) The recommendations and opinions expressed in this research report accurately reflect the Investment Analyst’s personal, inde pendent and objective views about any and all the Designated Investments and Relevant Issuers discussed herein. For important information,

please see the Important Disclosures section in the appendix of this document or visit Canaccord Genuity’s Online Disclosure Database.

Morning Summary | 5
19 June 2013

APPENDIX: IMPORTANT DISCLOSURES Analyst Certification:
Each authoring analyst of Canaccord Genuity whose name appears on the front page of this research hereby certifies that (i) the recommendations and opinions expressed in this research accurately reflect the authoring analyst’s personal, independent and objective views about any and all of the designated investments or relevant issuers discussed herein that are within such authoring analyst’s coverage universe and (ii) no part of the authoring analyst’s compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by the authoring analyst in the research. Coverage Universe Rating Buy Speculative Buy Hold Sell # % 583 58.2% 60 6.0% 308 30.8% 50 5.0% 1004* 100.0% *Total includes stocks that are Under Review IB Clients % 34.0% 55.0% 13.0% 6.0%

Distribution of Ratings:
Global Stock Ratings (as of 28 March 2013)

Canaccord Genuity Ratings System:

BUY: The stock is expected to generate risk-adjusted returns of over 10% during the next 12 months. HOLD: The stock is expected to generate risk-adjusted returns of 0-10% during the next 12 months. SELL: The stock is expected to generate negative risk-adjusted returns during the next 12 months. NOT RATED: Canaccord Genuity does not provide research coverage of the relevant issuer. “Risk-adjusted return” refers to the expected return in relation to the amount of risk asso ciated with the designated investment or the relevant issuer.

Risk Qualifier:

SPECULATIVE: Stocks bear significantly higher risk that typically cannot be valued by normal fundamental criteria. Investments in the stock may result in material loss.

Canaccord Genuity Research Disclosures as of 19 June 2013
“Canaccord Genuity” is the business name used by certain wholly owned subsidiaries of Canaccord Financial Inc., including Canaccord Genuity Inc., Canaccord Genuity Limited, Canaccord Genuity Corp., and Canaccord Genuity (Australia) Limited, an affiliated company that is 50%-owned by Canaccord Financial Inc. The authoring analysts who are responsible for the preparation of this research are employed by Canaccord Genuity Corp. a Canadian broker-dealer with principal offices located in Vancouver, Calgary, Toronto, Montreal, or Canaccord Genuity Inc., a US broker-dealer with principal offices located in New York, Boston, San Francisco and Houston, or Canaccord Genuity Limited., a UK broker-dealer with principal offices located in London (UK) and Dublin (Ireland), or Canaccord Genuity (Australia) Limited, an Australian broker-dealer with principal offices located in Sydney and Melbourne. In the event that this is compendium research (covering six or more relevant issuers), Canaccord Genuity and its affiliated companies may choose to provide by reference specific disclosures of the subject companies or its policies and procedures regarding the dissemination of research. To access this material or for more information, please refer to http://disclosures.canaccordgenuity.com/EN/Pages/default.aspx or send a request to Canaccord Genuity Corp. Research, Attn: Disclosures, P.O. Box 10337 Pacific Centre, 2200-609 Granville Street, Vancouver, BC, Canada V7Y 1H2 or disclosures@canaccordgenuity.com. The authoring analysts who are responsible for the preparation of this research have received (or will receive) compensation based upon (among other factors) the Corporate Finance/Investment Banking revenues and general profits of Canaccord Genuity. However, such authoring analysts have not received, and will not receive, compensation that is directly based upon or linked to one or more specific Corporate Finance/Investment Banking activities, or to recommendations contained in the research. Canaccord Genuity and its affiliated companies may have a Corporate Finance/Investment Banking or other relationship with the issuer that is the subject of this research and may trade in any of the designated investments mentioned herein either for their own account or the accounts of their customers, in good faith or in the normal course of market making. Accordingly, Canaccord Genuity or their affiliated companies, principals or employees (other than the authoring analyst(s) who prepared this research) may at any time have a long or short position in any such designated investments, related designated investments or in options, futures or other derivative instruments based thereon. Some regulators require that a firm must establish, implement and make available a policy for managing conflicts of interest arising as a result of publication or distribution of research. This research has been prepared in accordance with Canaccord Genuity’s policy on managing conflicts of interest, and information barriers or firewalls have been used where appropriate. Canaccord Genuity’s policy is available upon request. The information contained in this research has been compiled by Canaccord Genuity from sources believed to

Morning Summary | 6
19 June 2013
be reliable, but (with the exception of the information about Canaccord Genuity) no representation or warranty, express or implied, is made by Canaccord Genuity, its affiliated companies or any other person as to its fairness, accuracy, completeness or correctness. Canaccord Genuity has not independently verified the facts, assumptions, and estimates contained herein. All estimates, opinions and other information contained in this research constitute Canaccord Genuity’s judgement as of the date of this research, are subject to change without notice and are provided in good faith but without legal responsibility or liability. Canaccord Genuity’s salespeople, traders, and other professionals may provide oral or written market commentary or trading strategies to our clients and our proprietary trading desk that reflect opinions that are contrary to the opinions expressed in this research. Canaccord Genuity’s affiliates, principal trading desk, and investing businesses may make investment decisions that are inconsistent with the recommendations or views expressed in this research. This research is provided for information purposes only and does not constitute an offer or solicitation to buy or sell any designated investments discussed herein in any jurisdiction where such offer or solicitation would be prohibited. As a result, the designated investments discussed in this research may not be eligible for sale in some jurisdictions. This research is not, and under no circumstances should be construed as, a solicitation to act as a securities broker or dealer in any jurisdiction by any person or company that is not legally permitted to carry on the business of a securities broker or dealer in that jurisdiction. This material is prepared for general circulation to clients and does not have regard to the investment objectives, financial situation or particular needs of any particular person. Investors should obtain advice based on their own individual circumstances before making an investment decision. To the fullest extent permitted by law, none of Canaccord Genuity, its affiliated companies or any other person accepts any liability whatsoever for any direct or consequential loss arising from or relating to any use of the information contained in this research.

For Canadian Residents:

This research has been approved by Canaccord Genuity Corp., which accepts sole responsibility for this research and its dissemination in Canada. Canadian clients wishing to effect transactions in any designated investment discussed should do so through a qualified salesperson of Canaccord Genuity Corp. in their particular province or territory. Canaccord Genuity Inc., a US registered broker-dealer, accepts responsibility for this research and its dissemination in the United States. This research is intended for distribution in the United States only to certain US institutional investors. US clients wishing to effect transactions in any designated investment discussed should do so through a qualified salesperson of Canaccord Genuity Inc. Analyst(s) preparing this report that are not employed by Canaccord Genuity Inc. are resident outside the United States and are not associated persons or employees of any US regulated broker-dealer. Such analyst(s) may not be subject to Rule 2711 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account. This research is distributed in the United Kingdom and elsewhere Europe, as third party research by Canaccord Genuity Limited, which is authorized and regulated by the Financial Conduct Authority. This research is for distribution only to persons who are Eligible Counterparties or Professional Clients only and is exempt from the general restrictions in section 21 of the Financial Services and Markets Act 2000 on the communication of invitations or inducements to engage in investment activity on the grounds that it is being distributed in the United Kingdom only to persons of a kind described in Article 19(5) (Investment Professionals) and 49(2) (High Net Worth companies, unincorporated associations etc) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended). It is not intended to be distributed or passed on, directly or indirectly, to any other class of persons. This material is not for distribution in the United Kingdom or elsewhere in Europe to retail clients, as defined under the rules of the Financial Conduct Authority. This research is sent to you by Canaccord Genuity Wealth (International) Limited (CGWI) for information purposes and is not to be construed as a solicitation or an offer to purchase or sell investments or related financial instruments. This research has been produced by an affiliate of CGWI for circulation to its institutional clients and also CGWI. Its contents have been approved by CGWI and we are providing it to you on the basis that we believe it to be of interest to you. This statement should be read in conjunction with your client agreement, CGWI's current terms of business and the other disclosures and disclaimers contained within this research. If you are in any doubt, you should consult your financial adviser. CGWI is licensed and regulated by the Guernsey Financial Services Commission, the Jersey Financial Services Commission and the Isle of Man Financial Supervision Commission. CGWI is registered in Guernsey and is a wholly owned subsidiary of Canaccord Financial Inc. This research is distributed in Australia by Canaccord Genuity (Australia) Limited ABN 19 075 071 466 holder of AFS Licence No 234666. To the extent that this research contains any advice, this is limited to general advice only. Recipients should take into account their own personal circumstances before making an investment decision. Clients wishing to effect any transactions in any financial products discussed in the research should do so through a qualified representative of Canaccord Genuity (Australia) Limited. Canaccord

For United States Residents:

For United Kingdom and European Residents:

For Jersey, Guernsey and Isle of Man Residents:

For Australian Residents:

Morning Summary | 7
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Wealth Management is a division of Canaccord Genuity Limited. Additional information is available on request. Copyright © Canaccord Genuity Corp. 2013. – Member IIROC/Canadian Investor Protection Fund Copyright © Canaccord Genuity Limited 2013. – Member LSE, authorized and regulated by the Financial Conduct Authority. Copyright © Canaccord Genuity Inc. 2013. – Member FINRA/SIPC Copyright © Canaccord Genuity (Australia) Limited 2013. – Authorized and regulated by ASIC. All rights reserved. All material presented in this document, unless specifically indicated otherwise, is under copyright to Canaccord Genuity Corp., Canaccord Genuity Limited, Canaccord Genuity Inc. or Canaccord Financial Inc. None of the material, nor its content, nor any copy of it, may be altered in any way, or transmitted to or distributed to any other party, without the prior express written permission of the entities listed above.

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